Habito eyes PHL growth between 6.8-7.5% in ‘14

MANILA, June 24 (PNA) — The reconstruction and rehabilitation spending along with continued resiliency of remittances from Filipinos overseas made former National Economic and Development Authority (NEDA) Director General Cielito F. Habito forecast a 6.8-7.5 percent growth for the Philippine economy in 2014.

The renowned economist is optimistic that intrinsic strength of the economy will really fuel domestic expansion even with negative developments overseas.

In the first quarter of 2014, the domestic economy churned in a 5.7 percent expansion, slower than the previous quarter’s 6.3 percent on account of the impact of Typhoon “Yolanda” (international name: Haiyan) particularly on the supply-side factor.

Habito said the slowdown was expected given the devastation experienced by Eastern Visayas as well as its impact on supply and the need for major reconstruction.

”Because of things like the need for massive reconstruction, the new interest for Bangsamoro because of the peace agreement, the continuing growth in remittances, which has always been very resilient; and a few other factors I think we still have a good basis for continuing growth of seven percent and more in the year ahead,” he said.

Economic managers are optimistic that actual growth of the economy this year will still stay within the government’s 6.5 to 7.5 percent target.

Habito explained that based on his research the economy posts higher growth two quarters after a disaster happens due mainly to reconstruction efforts in areas hit by the disaster.

Relatively, the economist said the government has the leeway to spend higher as revenues continue to increase.

As of last April 2014, the government’s total revenues rose by 12 percent year-on-year to P622.86 billion.

Specifically, collections of the Bureau of Internal Revenue (BIR), which collects about 70 percent of government revenues, rose by seven percent year-on-year to P420.82 billion.

Also, collections by the Bureau of Customs (BoC) went up by 22 percent to P117.27 billion.

The main revenue collection agencies of the government have been posting increases in their collections but still failed to meet their monthly targets.

Habito said what should be focused on is not how these agencies failed to hit their targets but how they are posting improvements pointing out that the targets are “ambitious.”

”In fact my own sense of it is because the government feels that they have been able to control a lot of leakages there’s a lot more funds available in effect,” he said adding that “I think that spending will be put in the right place especially infrastructure.”

He also believes that improvements introduced in the BoC in recent months are sustainable because the new leadership are determined to put the necessary changes.

”My dream is to see Customs not only being seen as a revenue-raising agency but also as a developmental agency known for trade facilitation. Where they can afford to be confident that they can have more streamlined transactions because they are now afraid of too much leakages happening,” he said.

Meanwhile, the economist believes that the current problem on rice supply needs to be addressed by revisiting the government’s rice importation target.

He said the country is entering the lean months on rice supply, which is between July to October, thus, the need to reconsider the government’s bid to lower its importation target to ensure that the country will have enough rice supply.

”Now if that means importing more, finding out where there’s hoarding and manipulation going on and certainly all of that must be done,” he said pointing out that “we really have to do some determined homework to be able to stabilize the price of rice.” (PNA)